Diageo Sustainability Report: Beats Water Target Two Years Early
Diageo has improved water efficiency in its African operations by 32 percent since 2007, surpassing its target of 30 percent by 2015, according to the company’s latest sustainability and responsibility report.
On a worldwide basis the alcoholic beverage maker also aims to improve water efficiency by 30 percent by 2015, and says it is on schedule, with a 19.5 percent improvement since 2007. During the 2012-2013 financial year, it raised water efficiency by 1.5 percent.
In FY 2012-13 Diageo cut absolute water withdrawals by 4 percent, or 994,000 cubic metres. The company notes that it achieved the reduction despite increases in distilling, which is the most water-intensive part of its production. It has also been integrating acquired businesses which added over 6 percent to Diageo’s base year water impacts. The company has improved its water efficiency through a combination of continuous improvement and operational efficiency projects which conserve and reuse water from packaging lines, vacuum pumps, and the brewing process. Diageo says it is confident it will meet its worldwide water-rate target, though efficiencies will become harder to deliver.
The company has designated 12 of its production sites, and about 30 percent of its overall production, as located in water-stressed areas – often in regions where its business is growing. At these sites, its goal is to reduce water wasted by 50 percent by 2015, compared to a 2007 baseline. This year it achieved a 7 percent reduction, contributing to a 21 percent reduction against the baseline.
During FY 2012-13 Diageo also commissioned a program to analyze the impacts of climate change on water security and supply in East Africa over 25 years, focusing in particular on Nairobi, where three of its production sites are located.
The report is a thorough review of the company’s environmental impacts, including carbon, waste and packaging, with a heavy emphasis on water impacts. The company uses a variety of absolute and relative metrics, reporting progress in the past year and against its baselines. For the first time this year, the company had all its operational environmental metrics – carbon emissions, water, wastewater discharge and waste to landfill – independently assured. (In the previous two years, only carbon emissions and water metrics were assured.) Diageo says the report complies with Global Reporting Initiative principles at a B+ application level.
The report covers Diageo’s global operations for the financial year ended June 30, 2013.
Diageo’s volume of wastewater discharge (measured as BOD Ktonnes) increased by 9.8 percent over the past year. But projects it commissioned in Cameronbridge, Scotland; Douala, Cameroon; and other sites during the last quarter of 2013 will significantly reduce its waterborne pollution, the company says.
Diageo is spending £65 million ($101 million) on a 30 MW waste-to-energy plant that it says makes the Cameronbridge distillery the first in the world to combine biomass combustion, anaerobic digestion and water recovery. The company expects that this project will meet 95 percent of the site’s energy needs and recover up to 30 percent of the water used in the distilling process. At the distillery, which was responsible for 60 percent of Diageo’s global BOD in 2012, BOD output fell by 12 percent in the last quarter of FY 2012-13, during the commissioning of the bio-energy plant.
Meanwhile a new effluent treatment plant being commissioned at Douala is expected to reduce BOD by 90 percent in 2014.
By 2015, Diageo aims to reduce worldwide BOD by 60 percent from a 2007 baseline.
In the last year, the company achieved a 25 percent reduction in its volume of African brewing site BOD emitted to inland rivers. Diageo says this was a result of sustained investment in effluent treatment plant expansion and upgrades.
Diageo reduced its scope 1 and 2 carbon emissions by 4.1 percent this year, and overall by 26.3 percent compared to its 2007 baseline. The beverage company says it achieved this reduction in absolute terms even though production volume has grown, particularly in distilling, the most energy-intensive area of its business. The company says it is well over halfway towards its target of halving carbon emissions by 2015, from a 2007 baseline.
Diageo expects that the Cameronbridge bio-energy plant will reduce company CO2 emissions by over 5 percent by the end of 2014. Last year it also commissioned a natural gas-powered combined heat and power unit at its US Virgin Islands site, which it says will reduce site emissions by 14,000 metric tons of carbon a year.
Meanwhile, the company says that new businesses in Turkey, Ethiopia, and other markets have added 8 percent to its baseline greenhouse gas emissions.
The company did not include scope 3 in its 2015 target, but says it has improved its understanding of where its scope 3 impacts are greatest and is concentrating reduction efforts on those areas: logistics, key packaging and agricultural suppliers, and product refrigeration at point of sale. Last year it joined the CDP Supply Chain program and invited 125 key suppliers, representing about 80 percent of its total spend, to disclose their carbon emissions data.
Diageo’s total energy use increased by 3 percent over last year to 13.4 tetrajoules, due to increased production, although energy use was down 8 percent compared to the 2007 baseline. The company found efficiencies by improving insulation on cookers and stills, installing variable speed drives and low-energy lighting systems, and making changes to air condensers and boilers.
The company built a £6 million anaerobic digestion plant at its Dailuaine distillery in Scotland, to generates biogas from draff and pot ale condensate. This will supply 40 percent of the site’s electricity, while reducing CO2 emissions by 5 percent. A new biomass plant recently commissioned at Glenlossie, also on Speyside, is expected to generate 50 percent of the site’s energy, saving 6,000 metric tons of CO2.
In 2012-13 Diageo says it sourced 54 percent of its electricity from low-carbon sources, with some regions, like the UK and Ireland, approaching 100 percent.
At its Douala, Cameroon brewsery, Diageo converted boilers from oil to natural gas, which together with improved insulation and heat recovery cut carbon emissions by 30 percent.
The company says that over the past year, it significantly improved how it measures emissions from the distribution of finished goods, by including ocean freight shipments as well as road and rail transport. Its estimated 2012-13 CO2 emissions for this part of its value chain were 288,167 metric tons.
Over FY 2012-13 Diageo reduced waste to landfill by 53.4 percent, contributing to an overall reduction of 77.9 percent against its 2007 baseline. This has eliminated an estimated 80,000 metric tons of GHG emissions, equivalent to 11 percent of Diageo’s total emissions from direct operations.
At its Ogba brewery in Lagos, Nigeria, the company cut waste by 53 percent in one year by eliminating the need for kieselguhr, a soft rock used for filtration.
Overall, 25 of Diageo’s operational sites have achieved zero waste to landfill, while 50 sites send less than one metric ton of waste to landfill. By 2015, the company aims to eliminate all landfilling from its operations. The target is challenging, Diageo says, but adds that it is making good progress.
The vast majority of its waste is non-hazardous, including kieselguhr; organic matter like yeast remaining from the brewing and distillation processes; and the pulped labels from bottles that the company recycles. Other waste streams include damaged packaging, sludge from wastewater treatment, boiler ash, and office waste. Less than 0.5 percent of its total waste is hazardous, the company says.
Diageo cut its packaging weight by 1.2 percent, or 12,200 metric tons, over the course of FY 2012-13. It has cut 5.3 percent since 2007, en route to a targeted 10 percent reduction by 2015.
This year Diageo saved 1,600 metric tons of packaging by reducing the weight of Smirnoff Ice glass bottles in Venezuela, and a further 2,500 metric tons by improving the design of J&B whisky bottles.
The company aims to increase the average recycled content across all packaging by 20 percent, to 42 percent by 2015. This year, it increased recycled content by 2 percent to 36.5 percent, largely through increasing the content of recycled glass in the new Baileys bottle to 60 percent; through changes in cullet content (recycled glass which has been crushed and is ready for re-melting) across a range of beer bottles; and increases in the use of recycled glass in its Smirnoff and Bundaberg brands in Australia.
Violations and spills
Diageo had nine incidents of non-compliance with environmental consents in the past year, resulting in £68,119 in fines. There were 15 spills or incidents during the reporting year, totalling about 76,300 litres of spilled material. In all cases, the company says, regulators were informed and were satisfied with its response and follow-up.
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